Start-Up Visa (Blog Post)
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The U.S. economy has largely recovered from the Great Recession with a solid streak of private sector job growth -- growth began again in 2009 and has averaged an annual growth rate of 2.1% since then -- but the economy can still be pushed for new and innovative ways to create jobs. Increasing high-skilled immigration has been touted by politicians as a potential economy-boosting solution because it promotes the growth of American service sectors and fulfills positions in critical STEM work-fields. New research from the Harvard Business School has shown that immigrants are disproportionately represented in the field of entrepreneurship; despite the fact that immigrants comprise only 15% of the American population, they represent 24% of the pool of entrepreneurs.
Job growth by immigrants extends beyond small family businesses; immigrants increasingly have higher stakes in critical top-performing firms. A study by the Kauffman Foundation found that in 2012 these firms, in just engineering and high-tech sectors, “employed some 560,000 workers and generated $63 billion in sales.” Although the Harvard Business Review notes that immigrant-founded businesses are more likely to fail than native founded business, “those that survive experience greater employment growth”. Inc. Magazine generates a list of the 500 fastest growing companies in the United States and in 2014 20% of CEOs on the list were immigrants. There’s a clear trend here -- immigrants are disproportionately leading and creating high performing businesses, and that comes with jobs, billions in revenue, and increased prominence for the US in the financial-technology sector.
That trend has not gone unnoticed by the Obama administration, however. On August 26, 2016, the Department of Homeland Security proposed the “Immigrant Entrepreneur Rule” (nicknamed the “startup visa”). As currently written, the DHS would have discretionary case-by-case power to allow foreign entrepreneurs of startups to come into the country and stay. Eligibility is currently limited to those
- “Who have a significant ownership interest in the startup (at least 15 percent) and have an active and central role to its operations;
- Whose startup was formed in the United States within the past three years; and
- Whose startup has substantial and demonstrated potential for rapid business growth and job creation, as evidenced by:
- Receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments;
- Receiving significant awards or grants (at least $100,000) from certain federal, state or local government entities; or
- Partially satisfying one or both of the above criteria in addition to other reliable and compelling evidence of the startup entity’s substantial potential for rapid growth and job creation.”
While the public has until October 10, 2016 to submit suggestions before a final rule is put in place, many in the tech industry are approve of such a proposal as a step in the right direction. Tim Ryan, co-founder of Startup San Diego, even advocates for less stringent requirements but thinks that even as is the rule should prevent “brain drain” of highly-educated international students back to their home countries. Bernhard Schroeder, director at San Diego State University’s Lavin Entrepreneurship Center, offers the caveat of making sure the rule does not allow unproductive workers to stay in the US but agrees that it could help the country economically if it helps companies flourish like it is intended. After the United States Citizenship and Immigration Services responds to public comments the final rule will not be put in place until approved by the Federal Registrar.
